Sega announces first-half loss

Sega has reported a loss of £119.3m for the first half of its financial year.

It says plunging stock holdings have outweighed gains experienced after it abandoned console production.

Sega has reinvented itself as a developer of games for other machines after it stopped making the Dreamcast console earlier this year.

Worldwide sales of the console finally reached about 10 million this year after the company slashed its price, but Sony's PlayStation 2 - which went on sale last year - has already more than doubled that number.

Sega says it expects to sell all remaining Dreamcast machines during Christmas. The inventory stands at around 40,000 in Japan and 230,000 in the United States.

"We are determined not to lose our sense of crisis," says Sega president Hideki Sato. "We should never break our promise again."

Sega's sales for the half-year totalled £560.9m, down from £682.5m a year ago.

It took a charge of about £166m related to securities holdings that plunged in value because of the recent stock market fall. Many of these stocks were donated by former chairman and president Isao Okawa, who died in March, in an attempt to bail out Sega after the Dreamcast was scrapped.

Sega hopes to rely on its established brand in Japan, the US and Europe to grow as an entertainment company specialising in games.

It has been aggressively forging deals to create games for the PlayStation 2, Microsoft's Xbox and Nintendo's GameCube and GameBoy platforms. It also hopes to expand into new areas such as music on the internet, driving simulators and broadband karaoke downloads.